- 39 -
quantify or explain how he adjusted his analysis to take account
of that factor. Indeed, such factor has recently been rejected
by the Court of Appeals for the Ninth Circuit, the likely venue
of any appeal in this case. Estate of Simplot v. Commissioner,
249 F.3d 1191, 1195 (9th Cir. 2001), revg. 112 T.C. 130 (1999).
We did not find Dr. Spiro’s oral testimony to be persuasive. It
did not bolster what we found to be weak analysis in his written
reports.
We found Dr. Bajaj’s analysis in support of his 25-percent
basic discount to be both thorough and convincing, and we find
that a basic discount for lack of marketability in the amount of
25 percent is appropriate.
d. Additional Discounts
(1) Discount for Lack of Control
Dr. Bajaj describes his entire 35-percent discount as a
discount for lack of marketability. We view his proposed
discount for “agency problems”, however, as a discount for
minority status (or lack of control), as it is based upon the
inability of the owner of the shares to force the majority
shareholder, Gary Heck, to make dividend distributions.
Dr. Bajaj’s discount for minority status takes into account
factors similar to what Dr. Spiro took into account in addressing
problems associated with Korbel’s S corporation status, at least
to the extent that Dr. Spiro’s discount relates to the same lack
Page: Previous 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 NextLast modified: May 25, 2011